With more and more cashback companies (eg: cashrewards, qwibble) popping up; I always wonder how are they making money AND inviting the retailer to join their program; especially as they are not advertising it anywhere (that I know of) apart through OzB.
How Do Cashback Companies Make Money?
BigLeviathan on 10/12/2015 - 09:54
Last edited 10/12/2015 - 10:09 by 1 other user
Last edited 10/12/2015 - 10:09 by 1 other user
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By withholding payment to the buyer as long as they can to earn interest / put it into short term mid- high risk shares, on top of their additional 1-2% cut for driving traffic to retailers sites.
Must be a real juggling act for them - i reckon there must be some months where they can barely afford to keep the lights on - sales staff are also probably payed their commission 12+ weeks after end user purchases, just like customers
Also mining sites like ozbargain is gold to them - they need to keep showing increases in new sign ups and web traffic to get more retailers on board. They may even do really low introductory trial offers for retailers - which would Increase the need to hold the buyers rebate to limit outgoing funds.
TL:DR - how do they make money you ask? In short, smoke and mirrors - at both the front and back ends
Sometimes cashbacks might not come through, and if a certain percentage of people don't follow it up it becomes fairly lucrative.
Their proposition to the retailer is that they're going to deliver additional customers to them. So the retailer is effectively paying them a "commission" for every customer that comes through. They then pass on part of that commission (however much they decide) to the customer.
The more customers they can deliver, the more they can ask from the retailer in commission.
My experience with Qwibble was pretty negative, in some cases it took me following up 5 times over 18+ months to get a valid transaction recognised and for the cash to be received. So the impression I get is that the major retailers (in this case Dan Murphy were denying a valid claim) view this as more of a nuisance than something that delivers value for them. The fastest I ever got something recognised in Qwibble was like 4 months or something like that. Qwibble were also pretty lousy at customer service - they kept telling me they would get back to me. So I would wait and forget about it and then a couple months later check back and there would be nothing from them at all.
So that experience has put me off the cashback sites - not worth the time and effort and having to chase Qwibble on over half the transactions I made. I've never even tried with Cashrewards. Maybe they offer a much better experience or the retailers work with them more collaboratively.
Qwibble now days are run by Pure Profile — the company that sells your personal profile and opinions for reward points. I am not sure whether it's still actively developed, but I found them still having old rates or merchants that are no longer on the affiliate networks.
Give Cashrewards or PricePal a try.
Not to mention they hold onto your cash for a significant period of time in which they can earn interest or any other means of making it grow. So there is a small slice here and there, a lot of small slices add up quickly.
They don't really hold onto your cash for a long time. It's the merchants/affiliate network that take so long to pay them.
But I'm not aware that they are doing radical advertisement methods (such as TV and radio), I wonder why big retailers want to go ahead with them… Interesting
It's just classic affiliate marketing: https://en.wikipedia.org/wiki/Affiliate_marketing. I know about 5 years ago most affiliate networks banned cashback sites but that changed as the online market became a lot more competitive.
If Cashrewards can say they have driven $30 million sales a month, I can see retailers flocking to them as they have result to prove it. However where can they find the actual customers to bring to the retailers? Not surprised if OzBargain is part of their strategy.
Affiliate links mostly. shareasale.com is used by a lot.
difference between their take from the retailer and the % they give you.